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This paper highlights four key trends related to compensation: workforce supply and demand, merit process modernization, frontline workers, and pay transparency. To zoom in on two of these trends, a few data points include: 1) Merit Process Modernization: despite “peanut butter spread” approaches (equal budgets across the board) to merit award allocation being an outdated practice, only 6% of organizations differentiate merit budgets based on strategic factors. The authors recommend that companies adopt data-driven approaches that consider market positioning, pay equity gaps, and business criticality. Zero-based budgeting, guided by actual needs rather than historical patterns, is advised. 2) Pay Transparency Growth. Legislative requirements and rising employee expectations are driving the acceleration of pay transparency efforts. Notably, 46% of candidates won’t apply for jobs that lack compensation details. And many organizations are moving beyond minimum legal requirements, with 19% now including pay ranges in all job ads—up from just 8% in 2022. The paper offers additional data points and strategies to help HR leaders navigate evolving compensation challenges.
